Education Minister
Christopher Pyne
has already made the crucial admission – that he knows his higher education package is not going to get through the Senate intact.

In the past few days he’s conceded this in several ways. On Thursday he told a private colleges conference variously that “almost all" and “most" of it would pass. Then on Friday he told The Sydney Morning Herald that he was “realistic enough to know not everything will pass the Senate".

This is not the negotiating tactic of a minister who’s confident he’s in a strong position. Normally, when legislation is on a knife edge, a government doesn’t start giving things away until a Senate vote is close and they get something concrete in return for their concessions.

So why is Pyne conceding, at this early stage, that the Senate will alter his package? It’s a bow to reality because he’s in a political mess. Less than two weeks after he announced his deregulatory reforms to higher education as part of the budget, he’s being forced to retreat and regroup.

The problem is he’s running out of allies. In the lead-up to the budget he had a group of vice-chancellors behind him who supported fee deregulation. It was unprecedented for so many university leaders to back market-based pricing and this gave Pyne excellent cover for reform.

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But then Pyne blindsided them by not only deregulating fees, but cutting an average of 20 per cent from government tuition subsidies (and far more from engineering and science). He also raised the interest rate for the income contingent loans scheme (which most of us call HECS).

Vice-chancellors’ opposition

The result it that no vice-chancellors are huddling down with Pyne in the fox hole now. The minister is taking the flak by himself.

University of Adelaide vice-chancellor
Warren Bebbington
, who was previously Pyne’s most vocal supporter of fee deregulation, trenchantly dissed the government’s package last week, saying it could make the student debt burden in Australia worse than in the US. “Deregulation would become misregulation," he said.

Normally opposition from university leaders wouldn’t matter. Since when have governments thought that support from vice-chancellors was a necessary precursor for higher education changes?

But in the context of an unpopular budget, and the uncertainty of a Senate in which Clive Palmer holds the balance of power, suddenly it does matter what vice-chancellors think and Pyne has been forced to deal them back into the system.

The horse-trading started on Friday with the first meeting of the “legislation and financing ad-hoc working group", which represents a cross-section of universities, as well as private colleges and TAFEs, which also have a key interest in Pyne’s package. It was hastily pulled together by Pyne’s department and is being chaired by La Trobe University vice-chancellor
John Dewar
.

Pushed on key elements

Pyne is being cagey on the details of the agenda. He would no doubt like to see the discussions presented as just part of the consultation process, which was previously announced to refine the details of his reforms. But what’s going on is more than just refinement. Sensing the government’s overreach, the vice-chancellors are pushing Pyne to renege on some of the key parts of his package.

He’s being pushed to go back on the 20 per cent cut to tuition subsidies, and to reconsider the introduction of a real interest rate on HECS loans. In particular some want a reversal of the decision to reduce subsidies on science and engineering courses. And the imposition of interest rate rises from 2016 on students who already have HECS loans is being targeted.

The range of issues is not simple, and it’s unlikely that a fix for Pyne’s package can be sorted out in a few days. Expect it to be several weeks before the working group’s deliberations are over.

But can Pyne still pull a landmark deregulatory reform package out of this mess? Guardedly yes, for two reasons.

One is that the problems in the package are not central to the key goal of fee deregulation. He can make enough changes to mollify universities and still keep his market-based reforms. And secondly the universities are deeply split on fees and funding arrangements. Pyne can drive a wedge between them.

It’s hardly a great start to higher education reform. But when Pyne looks back on the past fortnight he can find bitter consolation in the fact that his problems with universities are only a minor part of the political disaster which the budget has become.